Category:Social Security Income Tax
Until I started drawing Social Security, I wondered why they would have a line on the 1040 tax form for "NON TAXABLE INTEREST," Well! I found out, it increases the tax you pay on Social Security Income, and they also get to tax your tax exempt interest. After looking into this tax, to my surprise I could see why the Tax Code was written the way it was! Yep, to eventually tax all Social Security Income of the middle class. The huge amount of revenue being generated is something even the conservative politicians do not want to see come to an end. Now that the Baby Boomers are on the verge of receiving Social Security, the revenues will be even greater.
Our officials in Washington, Republicans and Democrat's alike, finally figured a way to bypass the third rail in "Taxing Social Security".
FROM 1982 SOCIAL SECURITY TAX REFORM: The Base Amount for your Filing Status: How much income you can have before 50% of your Social Security benefit becomes taxable is known as the Base Amount. The base amount is determined by law and is not adjusted annually for inflation.The base amount that you use to determine the taxability of your Social Security depends on your filing status. Your first tier Base Amount is:
$25,000 if you file as single, head of household, or qualifying widow(er)
$25,000 if you file as married filing separately and you lived apart from your spouse all of the tax year.
$32,000 if you file as married filing jointly
$0 if you file as married filing separately and you lived with your spouse at any time during the tax year.
AMMENDMENTS: In 1992 the Clinton administration included this 2nd tier, increasing the taxable amount to 85%.
Second tier Base Amount is:
$32,000 if you file as single, head of household, or qualifying widow(er)
$32,000 if you file as married filing separately and you lived apart from your spouse all of the tax year.
$44,000 if you file as married filing jointly.
Included in this base amount are non taxable interest, and half of your Social Security benefit. So a senior couple with $25,000, in combined, annual Social Security income would have $12,500 of that added into their total income level, meaning that if they earned only $19,500 in other income, their government retirement benefits would become taxable. Though the federal government has taken great pains to eliminate so-called marriage penalties in the tax code for most filers, the marriage penalty still slams seniors. That's because the thresholds for taxing Social Security income for married couples are only slightly higher than the thresholds for singles, and every dollar you make above the threshold isn't taxed as $1; it's taxed as $1.50 or $1.85. Have you noticed the "base amount" remained the same since it's inseption in 1984! THE EFFECTS OF INFLATION: In 1984 the Base amount of $25000 is equal to $46,190.69 in 2006 dollars, $32,000 is equal to $59,124.09 in 2006 dollars, and 44,000 is equal to $81,295.62 as converted by Federal economic data. Conversely $32000 in 2006 dollars, would have been the same as $16000 in 1984. Go to Federal Reserve Bank http://minneapolisfed.org/research/data/us/calc/. I am sure you will be as surprised as I was. IRS STATISTICS ON INCOME: Reveals that from 1990 to 2005 the amount of individual returns reporting Social Security Income Taxes went from 5,082,575 to 12,660,754 and Revenues went from $19,686,539* to $124,829,069*. Latest update 2005 figures, returns are 12,660,754 and Revenues are $124,829,069*. (Thats BILLIONS). Now tell me who is the largest recipient of Social Security? Would it be the elected officials in Washington? Do not believe them when they say it goes back to Social Security Fund, that fund does not exist after they rolled it into the General Fund to make it look as if the deficit had been reduced. Having sent many letters to, Republicans members of Congress and the president, on this subject I conclude that there is no interest in changing the way the tax is calculated or to connect it to the "cost of living index". http://jdraus1.home.insightbb.com/
Pages in category "Social Security Income Tax"
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